Recursive Nash-in-Nash Bargaining Solution

Keith Waehrer and Xiaowei Yu

February 3, 2019

The standard Nash-in-Nash solution is commonly applied in a number of policy applications. However, this bargaining framework does not capture renegotiation on off-equilibrium paths or contingent contracts and as a result in some situations the predictions of standard Nash-in-Nash are counter-intuitive. In this paper, Partner Keith Waehrer and Xiaowei Yu propose a new bargaining solution for interdependent bilateral negotiations, which they call the recursive Nash-in-Nash bargaining solution.